Breadcrumb

10 Rich Dad Tips for Investing Like Robert Kiyosaki

Robert Kiyosaki is an American businessman and author. He is known as the author of the best-selling "Rich Dad Poor Dad" book series. You might think that the "Rich Dad" refers to Robert Kiyosaki. It's not. The "Rich Dad" is a character in the book that was the father of Mike, the author's best friend. The "Rich Dad" dropped out of school at the age of 13. He owned businesses and made investments that made him one of the richest men in Hawaii. The "Poor Dad" in the story was the author's biological father. The "Poor Dad" was highly educated and worked for the government in the field of education. Both made different decisions in life that results in one becoming rich and the other not amassing any wealth.

Robert Kiyosaki has a net worth of over $80 million. He has been in the real estate, oil, and mining business. He is also the founder of Rich Dad Company. It offers training and workshop to help educate you about finance,investing and business.

1) Educate Yourself

This is not the education that you are thinking of. You don't have to go to expensive business schools or workshops. You can start by looking at the internet. There are lots of materials on the internet that can help you learn more about investing. The reason why people stay poor is that they are not knowledgeable in the investment field.

Educating yourself is cheap but it can be costly too. If you really have the time and funds to be educated, you can look for famous people in the investing world that are offering seminars, workshops, and lessons. Investing in yourself is the best way to start off.

2) Identify How Your Income Works

Most people fail to identify what and how their income came about. They don't care how the process works as long as they're receiving money. This is bad in the long run as you won't know the factors that keep the money flowing. There might be events or problems in the future that will affect your income and you won't know what to do.

According to "Rich Dad", there are three types of classifying income. These are:

Earned income - This is income earned from doing a job. This income is usually in the form of cash or check. Doing a job means spending time doing the job. The time you can do a job is only limited to a day. Also, this type of income is the highest-taxed among the three.

Portfolio income - This is income generated by paper assets like stocks, bonds, and mutual funds. Its second to earned income as the highest-taxed. This form of income usually yields a low return on investment but is a safe way of investing.

Passive income - This is income generated by real estate, royalties, and distributions. It's the lowest taxed among the three. "Rich Dad" recommended this type of income because of its low taxes and potential lifetime returns.

3) Turn Your Regular Income to a Passive Income

People at the start of their careers make money through earned income by doing jobs. Most people just keep their income in savings. But other people also use their earned income to invest in instruments to produce portfolio income or passive income.

When you amass wealth by doing jobs you should know that you can only do it for a limited amount of time. You get older and your work efficiency tends to become slow. You would then have to stop working and your income stops.

"Rich Dad" recommends as early as you can to turn your earned income into passive income. It's taxed low and the income you earned has the potential to earn for a lifetime.

4) It's on You Whether Your Investment Would Fail or Succeed

Investing isn't a very hard field to explore. You might think it's only for the smart and cunning people but it's not. It's all about being ready. You don't just dive head first and start investing. You'll fail that way. That's why investing has a reputation of being hard and risky. People tend to become impulsive and start investing without making preparations. They end up losing their money and telling other people that it's a hard thing to do. When all they needed was to take their time and learn the field before investing.

Investing isn't a way to get instant money. It's about patience and waiting for the right opportunity to score a return on your investment. It's slow and boring but these types of investment tend to yield successful results.

5) Mistakes Make You Wiser

If you want to make your investments succeed then you have to make mistakes. You start off first with small investments. That way you won't incur huge losses. Learn how it went and what mistakes you made from it. Then work your way up to bigger investments. As you work your way up, you gain knowledge from experiences gain at the start of your small investment. This will give you confidence and a higher success rate in investing.

6) Preparation is Important

Preparation is everything. If you are prepared, you won't make hasty or stupid investment decisions. Don't try to be the one who predicts when the next financial crisis happens. Instead, be the one who is prepared for anything that can happen.

According to "Rich Dad", you should focus on what you want, be alert on what's happening right now, and grab to any opportunity that arises. There are plenty of resources available around you. You just need to put in the effort to find them and gain knowledge from it.

7) Good Deals Find Money

When you have made your preparations through education and experience, you will find some good deals that are way out of your financial capacity. The problem then would be how to raise the money to grab that good deal. "Rich Dad" advised us to grab any opportunity and focus on what we want.

So how do we raise the money?

You just have to find the people who will give you the money.

Why would they give you the money?

This is where your preparation comes in handy. You invested in yourself, which means you have the knowledge, education, and experience. People will trust you. People look for competent and confident people to entrust their investments on.

8) Calculate the Risk and Reward in Every Investment

Every investment comes with its risks. You should learn how to choose the ones that are a good deal for you. How do you identify the risks? By collecting information about the investment. You should look into every aspect related to the investment you're making. Examples would be company performance, management, assets, location, customer feedback, and many more.

Identifying the risks means you are well prepared in the event that these risks come. It also helps you choose the optimal investment and decision making.

9) Buy When the Market is in Turmoil

The basic concept in investing is to buy low and sell high. But when a financial crisis strikes, investors let their emotions get the better of them. They sell everything they have and move away from the market.

For Kiyosaki, this is the best time to invest cause you to make more cash. Some companies out there have stood countless crisis and still continue to grow. As long as you make the preparations and research then your investment should pay off when the market recovers.

10) Buy Assets, not Liabilities

If you really want to secure financial stability, then you should refrain from spending on liabilities. Don't spend it on things like designer bags, expensive phones, and branded clothes. These things don't generate income for you and its value depreciate over time.

You should spend it on assets like real estate. Or if you have the time to manage, invest in things that have the potential to generate income like a rental car. Don't think first about your dream vacation or luxury car. You have to prioritize first the stable income that can help you sustain your retirement plan. When the income kicks in then you can say hello to your dream vacation.

Conclusion

Robert Kiyosaki's book "Rich Dad Poor Dad" taught us that even if you don't have a degree in college, you can succeed in investing. "Rich Dad" was a dropout from high school who started his own business and gradually succeeded. "Poor Dad" had a degree in college and a job at the government but failed to amass wealth. We can learn from this that even if we have the education but we don't use it and try to invest and make mistakes we won't go anywhere. Venturing out and making mistakes gives you experience, and experience makes you wiser.

"Rich Dad" was based off a real person who was Kiyosaki's mentor in school, Richard Kimi. Richard Kimi owned a hotel chain in Hawaii. His hotels were catered to locals and travelers who are looking for cheap accommodations. After his death his son, Alan took over the business.

So "Rich Dad" is a real person. If he can do it, then surely you can do it. You just have to put in the effort and you are on your way to creating your wealth. Robert Kiyosaki's tips are surely logical and well thought out.

Disclosure: The information on this website is for educational purposes only and does not provide financial or legal advice. The FTC requires us to disclose that we provide affiliate links. So if products or services are purchased through our affiliate links, there's a chance that we'll earn commissions. We only make recommendations on items that we truly feel will help our visitors.